TRAIN had no impact on Jan inflation – DOF

The government's tax reform program had no impact on the inflation reported in January except for the rise in the prices of sugar-sweetened beverages, the Department of Finance (DOF) claimed Sunday.

"Except for sugar-sweetened beverages, TRAIN (Tax Reform for Acceleration and Inclusion) had no impact on inflation," it said in a statement.

Inflation — the rate at which consumer prices grow — accelerated to 4.0 percent in January, the fastest in over three years.

The Bangko Sentral ng Pilipinas (BSP) attributed the acceleration to the combination of the first round of effects of TRAIN and higher excise taxes.

President Rodrigo Duterte signed the TRAIN Law in December and took effect in January. It lowered personal income tax (PIT), expanded the value-added tax (VAT) base, and increased excise taxes on sugarsweetened beverages.

The DOF said, however, that the acceleration in January was also largely driven by increases in the prices of food and non-alcoholic beverages (0.39 percentage points), alcoholic beverages and tobacco (0.07 percentage points), and non-food items (0.12 percentage points).

Aside from this, the DOF attributed the faster acceleration to the increase in utility rates, and the depreciation of the Philippine peso which fell to as low as P51:$1 during the month.

"The peso depreciation followed the rise in interest rates in the US, leading to outflows of foreign exchange from emerging economies including the Philippines," it said.

The central bank last week said it expects inflation to accelerate further to as high as 4.8 percent in February, driven by higher utility rates and excise taxes.